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91 <br />103186.8 <br />TO: Mayor and City Council <br />V' <br />FROM: Mark Lernhardson, City Administrator <br />DATE: October 31, 1986u <br />SUBJECT: City of Orono Liquor Store Operation <br />ATTACH14ENTS: A. McGowan Memo on Liquor Store Dated 11/5/86 <br />B. 1986 Third Quarter Liquor Store Results Dated <br />10/27/86 <br />C. Liquor Store Operations/Strategic Business <br />Plan 1986 Dated 12/5/85 <br />D. Liquor Operations Report - January -March '86 <br />Dated 4/21/86 <br />E. Liquor Store Performance Dated 8/20/86 <br />ISSUE - Does the Council desire to continue in the liquor <br />business or choose to sell it to a private concern. <br />DISCUSSION - Presented to you at the October 27, 1986 Council <br />meeting were the results of the third quarter as noted in <br />Attachment B. Given the late delivery of the results to the <br />Council together with the fact that one of the Councilmembers was <br />not present, Council chose to table this until the November 10, <br />1986 meeting upon staff recommendation. <br />As noted in the (Attachment C) results discussion of previous <br />quarter results together with the business strategy plan, the <br />following are the primary considerations for determining whether <br />you stay in the business or not; <br />A. EMPLOYEES - Primary reason given to the Council for <br />recommending that we continue in the business for 1986 <br />was the opportunity to see if it remained a viable <br />option in order to preserve the current employee's <br />positions. This was done at a cost of having to cut two <br />of the fL time people back to half time basis. It is <br />doubtful t the operation could afford to bring these <br />two back i full time basis. Given the tenuous natyre <br />of the o, :ation salary incre: s could only come if <br />tied to store performance, alt._.gh as noted they all <br />would desire to continue with the operation. <br />B. CITY REVENUE - Municipal liquor store revenues up to <br />198T—were very respectable and exceeded the revenue <br />generation ability for the return on investment based on <br />the City's sale of the property. (Inventory and store <br />fixtures are the only assets as the space is leased from <br />Mr. Keaveny.) Due to the change in the liquor business <br />however, this rev^nue picture has changes] with Orono <br />realizing a loss slur � ng 1985. Expectations fog the end <br />of the year show .)L City making approximately $14- <br />I <br />